v3.26.3
BUSINESS COMBINATIONS
 9 Months Ended
Sep. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
BUSINESS COMBINATIONS
NOTE 2 — BUSINESS COMBINATIONS

Branch Acquisition
FCB completed the BMO Branch Acquisition on the BMO Branch Acquisition Date. In connection with the BMO Branch Acquisition, FCB assumed $4.86 billion in deposits, acquired $643 million in loans, paid a preliminary deposit premium of $262 million, and acquired other assets and assumed other liabilities as further discussed below.

The BMO Branch Acquisition was accounted for as a business combination, as defined by ASC 805, Business Combinations, using the acquisition method of accounting, which requires the consideration exchanged, assets acquired and liabilities assumed to be recognized at fair value as of the BMO Branch Acquisition Date. The determination of fair value requires management to make estimates about discount rates, future cash flows, market conditions and other future events that are highly subjective in nature. The fair value measurements of certain assets and liabilities are preliminary as we review the associated valuation assumptions and methodologies. Fair values are considered preliminary until final fair values are determined, or the measurement period has elapsed, which is no later than one year from the BMO Branch Acquisition Date. We believe the preliminary fair value estimates of assets acquired and liabilities assumed are reasonable.
The following table provides the preliminary purchase price allocation to the identifiable acquired assets and assumed liabilities at their estimated fair values, along with the purchase price consideration, as of the BMO Branch Acquisition Date. The deposit premium is the purchase price consideration in the BMO Branch Acquisition because it represents the amount FCB paid BMO in order to obtain the acquired deposit franchise and related branch operations, as well as the assumed liabilities and acquired assets.

Preliminary Fair Value Purchase Price Allocation
dollars in millions
Fair Value Purchase Price Allocation as of September 4, 2026 (1)
Purchase price consideration
Deposit premium paid$262 
Assets
Cash$23
Interest-earning deposits at banks4,109 
Loans, net of ALLL638 
Premises and equipment92 
Core deposit intangibles192 
Other assets18 
Total acquired assets$5,072 
Liabilities
Deposits$4,861 
Other liabilities21 
Total assumed liabilities $4,882 
Net assets (2)
$190 
Goodwill$72 
(1) Includes final settlement amounts as of the BMO Branch Acquisition Date.
(2) Includes the fair value purchase accounting adjustments for assumed liabilities, acquired assets, and core deposit intangibles. Also includes the fair value of interest-earning deposits at banks as further discussed below.

Preliminary goodwill of $72 million represents the excess of the purchase price consideration of $262 million over the estimated fair value of the net assets of $190 million as of the BMO Branch Acquisition Date. The goodwill was allocated to the General Bank segment and is expected to be deductible for income tax purposes. Refer to Note 8—Goodwill and Core Deposit Intangibles for additional information on our goodwill.

The following are descriptions of the methods used to determine the estimated fair values of the assets acquired and liabilities assumed, as presented above:

Cash and interest-earning deposits at banks
Cash included the cash on hand at the acquired BMO branches at the BMO Branch Acquisition Date.

Interest-earning deposits at banks included the net settlement proceeds that BMO transferred to FCB’s interest-earning deposit account, held with the Federal Reserve Bank (“FRB”), in connection with FCB assuming the net liabilities of the acquired BMO branches.

For financial instruments with a short-term or no stated maturity, prevailing market rates and limited credit risk, including cash and interest-earning deposits at banks, carrying amounts approximated fair value.

Loans
The loans acquired in the BMO Branch Acquisition primarily consisted of commercial and industrial, commercial real estate, and other consumer loans associated with the acquired branches. Fair values for acquired loans were estimated using BancShares’ fair value framework which incorporated expected cash flows, expected credit losses, prepayment assumptions and market participant discount rates. Refer to Note 12—Fair Value.
As discussed in Note 1—Significant Accounting Policies and Basis of Presentation, we adopted ASU 2025-08 on January 1, 2026. Consequently, we applied the Gross-Up Approach to all loans acquired in the BMO Branch Acquisition which resulted in an ALLL for PSLs (“BMO PSL ALLL”) and a gross-up to PSLs (“PSL Gross-Up”) at the BMO Branch Acquisition Date of $5 million. Furthermore, the ALLL for PCD loans and leases was less than $1 million and FCB did not acquire any credit card loans in the BMO Branch Acquisition.The following table summarizes the fair value discount and the Gross-Up Approach for acquired loans as of the BMO Branch Acquisition Date:

Loan Fair Value Discount and Gross-Up Approach
dollars in millionsAcquired Loans as of the BMO Branch Acquisition Date
Unpaid principal balance$643 
Fair value discount (1)
(5)
Loans at fair value638 
PSL Gross-Up (1)
5 
Loans at fair value, after PSL Gross-Up643 
BMO PSL ALLL(5)
Loans, net of ALLL$638 
(1) The non-credit fair value discount was immaterial, so there is no discount to accrete to interest income over the contractual lives of the applicable loans.

Premises and equipment
Fair values for premises, furniture and fixtures, and other equipment were determined using the cost approach.

Core deposit intangibles
Core deposit intangibles of $192 million will be amortized on an accelerated basis over an 8-year estimated useful life.

Certain core deposits were acquired as part of the BMO Branch Acquisition, which provide an additional source of funds for BancShares. The core deposit intangibles represents the costs saved by BancShares by acquiring the core deposits rather than sourcing the funds elsewhere and was valued using the after tax cost savings method under the income approach. The fair value measurement was determined by discounting to present value the favorable funding spread attributable to the core deposit balances over their estimated average remaining life. The favorable funding spread was calculated as the difference in the alternative cost of funds and the net deposit cost. Refer to Note 8—Goodwill and Core Deposit Intangibles for further detail.

Deposits
Estimated fair value of transactional deposits approximated carrying amounts. Fair values for time deposits were estimated using BancShares’ established fair value framework for existing portfolio time deposits. This methodology is based on a discounted cash flow technique using Level 2 inputs (refer to Note 12—Fair Value) appropriate to the contractual maturity.

Other assets and other liabilities
Other assets and other liabilities primarily included the right-of-use assets and the associated operating lease liabilities for leased branches assumed in the BMO Branch Acquisition. Additionally, other assets included accrued interest income for acquired loans, while other liabilities included accrued interest expense for assumed interest-bearing deposits.

Pro Forma Information
BancShares’ results for the three and nine months ended September 30, 2026 included the income statement impact of the BMO Branch Acquisition, beginning on the BMO Branch Acquisition Date. Revenue and net income attributable to the BMO Branch Acquisition, and supplemental pro forma information are not presented because the impacts are not material to BancShares’ unaudited Consolidated Statements of Income.

SVBB Acquisition
On March 27, 2023, FCB acquired substantially all loans and certain other assets and assumed all customer deposits and certain other liabilities of Silicon Valley Bridge Bank, N.A. from the Federal Deposit Insurance Corporation (the “FDIC” and such transaction, the “SVBB Acquisition”) and FCB issued a five-year $36.07 billion note payable to the FDIC, maturing March 27, 2028, which was amended and restated on November 20, 2023 (the “Purchase Money Note”) and is collateralized by certain loans. Refer to Note 10—Borrowings for the outstanding carrying value of the Purchase Money Note.